TRG | The Bottom Line – 12/17

Another year is coming to a close, and while 2021 was a repeat of 2020 from a “dealing with COVID” standpoint, it set the stage for multiple themes going into 2022. COVID is fueling the fire for multi-generational changes, the trends of which will impact how and where people live. COVID accelerated the migration theme that had been playing out recently with population shifts to the south and southeast. While birds fly south for winter, people are flying south for good. This has immediate and long term impacts across res / non-res / public end markets. With the migration theme playing out, 2022 is expected to see several key themes that will dominate the headlines and how people think about operating their businesses. Inflation ain’t going away and will remain a factor in 2022. The state of the supply chain is not back to pre-COVID efficiency, but constraints are easing into 2022. Labor is expected to be the new weather and act as a scapegoat for fundamental problems. Public funding and State DOTs will increase lettings in 2H’22 and in FY’23 and beyond as they are flush with cash given 1) improving economy post COVID, 2) federal stimulus dollars that more than covered COVID losses, 3) newly passed highway bill. TRG’s 2022 Key Themes Thought piece details these themes and provides our top stock picks that play off of these themes.